Exante partner Pablo Rosselli prepared a summary of the arguments against the intended constitutional reform in matters of social security.
He plebiscite against social security reform that drives the PIT-CNT continues to raise concerns among many economists Uruguay —as well as among government authorities—, especially as the end of the deadline for submitting adhesions to the Electoral Court and that the union center seems to be close to reaching the threshold of 270,000 signatures necessary to enable the binding popular consultation in October.
In that sense, the economist and partner of Exante, Pablo Rosselli, prepared a summary of the arguments behind the rejection of the initiative of the PIT-CNT, which he described as “a terrible initiative, regressive and reckless.” His criticism thus joins a long list of detractors that even includes the credit rating agency. Fitch Ratings.
In a thread on Constitution, because the Constitution is very difficult to change and must be used to establish the major rules of the legal system.” This, in reference to the fact that the intention of the union center is to promote a Constitutional reform in terms of social security that proposes a minimum retirement age of 60 years, a pension tied to the national minimum wage and the elimination of individual savings, the AFAP and profit in the pension system.
“Those who promote constitutional reform aspire for the state to earn more taxes or contributions to social security to finance the system’s deficit. The truth is that Uruguay It already has high public spending on passivities. If we were to increase the Tax pressure, “We should think about allocating these resources to combat poverty and marginality, which substantially affects children and adolescents,” Rosselli considered.
A “deeply regressive” reform
In that sense, the Exante economist assured that “the constitutional reform is profoundly regressive.” Firstly, because “it is the people with better careers and higher incomes who can accumulate 30 years of service at the age of 60”, while “those with lower incomes must work beyond the age of 60, even if the this reform.
Another argument to support the idea of regressivity was that “it acts to the detriment of the younger generationswho are the ones who suffer the most from poverty and unemployment and who will have to endure greater tax pressure” to sustain a expanded pension system due to the minimum retirement age of 60 years—which social security reform increased to 65 years, precisely, to guarantee the sustainability of said system.
Thirdly, Rosselli pointed out that, in addition, “the indexation of minimum passivities to the National Minimum Wage will end up encouraging future governments to delay the minimum salary, as was the case until 2005.”
“The reform is reckless because it proposes a strong instantaneous increase in public spending (increase in minimum liabilities) and enormous legal uncertainty, not only due to the confiscation of the savings managed by the AFAPS but also because it calls into question the 1996 reform,” considered the Exante partner, who also warned: “If this project of constitutional reform ends up being approved, the next government will have to manage a complex inheritance for public finances and will have to dedicate a lot of political effort to finding a legislative solution that complies with the Constitution.”
Source: Ambito
